Order Types

Alpha5 will allow for the following type of orders:

Market

These are orders that are sent to market for immediate execution at the prevailing market price.

Limit

These are orders that specify a particular level at which a trader is willing to buy or sell. By definition, a Buy-Limit order is at or below the prevailing market price, and a Sell-Limit order is at or above the prevailing market price. These orders are only executed when other trader(s) elects to execute at such prices. A Limit order cannot have a worse fill than the one input, but at times of high volatility, it is sometimes possible that a Limit order is executed at a better price than intended. This is due to numerous factors, including manual lead-times for input of orders.

Stop or Stop-Market

Stop & Stop-Market names are used interchangeably at times. Both denote the desire to either:

  • Buy at a rate above the current market or
  • Sell at a rate below the current market

A Stop Order is typically entered to limit losses. If a trader is short, and the market is rising, a stop-order will convey a level at which the trader wishes to exit that position. Likewise, if a trader is long, and the market is falling, a stop-order will convey a level at which the trader wishes to exit that position.

Note that Stop or Stop-Market orders have an element of slippage. This means that though you have input a particular level to exit the position; it is a trigger level (on Alpha5 you can pick the Trigger to be the Last Traded Price, Mark Price, or the Index Price), and the actual execution may differ. At times of high volatility, the actual execution rate may be very different to the Stop or Stop-Market Rate.

Stop Limit

A Stop-Limit order combines elements of a Stop Order and a Limit Order. With this Order type, when a particular market level is reached, a Limit Order is created. This is sometimes done to limit the slippage mentioned in Stop Orders.

That is, a trader that is short XBTUSD at $10,000 enters a Stop-Limit order with a Stop-Price of $11,000 and Limit Price of $10,850. In this instance, if the market goes to $11,000, the trader’s position is NOT closed. Instead, a Limit order is created to buy XBTUSD back at $10,850.

*Note that with this type of order there is no guaranteed fill. In the above instance, it is very likely that the market continues to move materially higher once $11,000 is triggered. If so, the trader’s entire account would be at risk.

Trailing-Stop (Coming Soon)

A Trailing-Stop order is used often to protect the PnL accrued in a position, but without closing it out at that time. In this order, a Trail Price is identified and if the market falls back a certain amount, a Stop-Order is immediately created and executed. If a Trader is Long, they can create a Trailing-Stop to see if the market will continue to rise; the Trail Price will rise with the market (like a shadow). And if the market retraces to the Trail Price at a given point, a Stop-Order will allow them to exit the position.

Bracket (Coming Soon)

A Bracket order has a main order, and 2 conditional orders around it (A Limit and a Stop order). This type of order helps define an entire trade.

For instance, if a Trader creates an order to buy at $10,500 with a Bracket stop-loss at $9,800 and Limit sell at $12,500, he/she has pre-defined their maximum loss/gain prior to entering the trade.

Post-Only (Coming Soon)

A Post-Only order ensures that a Limit Order is not immediately executed. Sometimes, as the market moves very quickly, it is possible that by the time a Limit Order is placed, it is immediately executed. This can sometimes have the consequences of being a Taker and paying the Taker Fee. However, with a Post-Only order, the order will only post if it ensures that at the time of entry, the order will not remove immediate liquidity from the market and will benefit from being a Maker and paying 0 fees.

Iceberg (Coming Soon)

With an Iceberg order, a larger order is automatically divided into smaller orders so that actual order quantity remains hidden; much like an iceberg, only a small amount is visible at all times, although the entire order stands valid.